SUMMER 2011TAKE HOME 3 - BUS 205 FINANCE PROF. JEFFERS TAKE...

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BUS 205 FINANCE PROF. JEFFERS TAKE HOME #3 MC NAME:_____________________________ DATE:_____________ Chapter 5 Time Value of Money ------1. A famous athlete is awarded a $9 million contract that stipulates equal payments to be made monthly over a period of five years. To determine what such a contract is worth today, you would need to use: a. present value factors b. future value factors c. present value factors of an annuity d. future value factors of an annuity ------2. Which of the following terms best describes an annuity due? a. a perpetuity b. unequal payments c. payment at beginning of year d. payment at the end of the year ------ 3. The _________ value of a savings or investment is its amount or value at the present time. a. present b. future c. book d. none of the above ------ 4. A loan that is repaid in equal payments over a specified time period is called a(n) a. discount loan b. balloon loan c. amortized loan d. none of the above -------5. Interest earned only on an investment’s principal or original amount is referred to as: a. simple interest b. compound interest c. discount interest d. annuity interest -------6. A series of equal payments or receipts that occur at the beginning of each of a number of time periods is referred to as: a. an ordinary annuity b. a deferred annuity c. an annuity due SUMMER 2011 TAKE HOME 3 – Page 1
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BUS 205 FINANCE PROF. JEFFERS d. an extraordinary annuity -------7. A loan that is repaid in equal payments over a specified time period is referred to as a(n): a. discounted loan b. amortized loan c. simple interest-free loan d. inflation-indexed loan
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SUMMER 2011TAKE HOME 3 - BUS 205 FINANCE PROF. JEFFERS TAKE...

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